Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Retirement

‘We are only beginning’ to navigate superannuation and dementia: report

By Lucy Dean · April 11 2018
Reading:
egg
egg
egg

Retirement

‘We are only beginning’ to navigate superannuation and dementia: report

By Lucy Dean
April 11 2018
Reading:
egg
egg
egg
Dementia

‘We are only beginning’ to navigate superannuation and dementia: report

author image
By Lucy Dean · April 11 2018
Reading:
egg
egg
egg
Dementia

Australia has only scratched the surface on the ramifications of dementia on superannuation’s choice-based structure, a new report argues.

According to new findings from the Arc Centre of Excellence in Population Ageing Research (CEPAR) and Neuroscience Research Australia (NeuRA), the direct cost of dementia is set to hit $12 billion by 2025. That’s compared with $9 billion in 2016, the Cognitive ageing and decline: Insights from recent research report found.

However, CEPAR and NeuRA also found the rising prevalence of dementia in Australia will have consequences for financial decision-making.

“Our retirement income system is very complex and requires a lot of active decisions. We are only beginning to think about how population ageing will affect the decision-making ability of older cohorts and what insights psychology and behavioural finance can bring,” said CEPAR director Professor John Piggott.

He called for greater investment into ageing research to help identify dementia risk factors, build strategies to assist financial decision-making in old age and create more workplace support for older workers.

Advertisement
Advertisement

The report’s co-author and CEPAR chief investigator at UNSW Professor Kaarin Anstey added that about 8 per cent of Australians in their 60s experience mild cognitive impairment, although a large portion of this cohort never develop dementia.

Nevertheless, even a mild cognitive impairment can have significant consequences for decision-making.

It doesn’t help that financial decisions are difficult for Australians of all ages, Professor Hazel Bateman added.

The CEPAR chief investigator at UNSW Business School explained, “Australians nearing retirement score higher in tests of financial literacy than younger people or those in other countries, but about half of them answer basic questions about inflation, interest rates and diversification incorrectly.

“As the population ages and more people face cognitive limitations, we need to consider whether the choice architecture of superannuation can cope.”

According to CEPAR and NeuRA analysis of behavioural finance, defaults can be useful but require careful design.

Additionally, improved regulation of information provision safeguards against inappropriate financial advice to vulnerable consumers and financial literacy programs that cater to older Australians’ learning styles are required.

“The need to allow individuals their financial freedom while mitigating confusion and poor decision-making among this age group is something that has yet to be reconciled in the literature and in policy,” Professor Bateman concluded.

‘We are only beginning’ to navigate superannuation and dementia: report
Dementia
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

LATEST POLL

Are you seeking alternatives to equity and property in the next 12 months?

Yes - 44.4%
No - 55.6%

Total votes: 473
The voting for this poll has ended

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.